Official Testing Service for Corn Oil, Protein, and Starch

DEPARTMENT OF AGRICULTURE

Grain Inspection, Packers and Stockyards Administration

7 CFR Part 801

RIN 0580-AA62

Official Testing Service for Corn Oil, Protein, and Starch

AGENCY: Grain Inspection, Packers and Stockyards Administration, USDA.

ACTION: Final rule.

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SUMMARY: The Grain Inspection, Packers and Stockyards Administration

(GIPSA) is adopting, without change, the provisions of an interim rule

extending the use of the currently approved near-infrared spectroscopy

(NIRS) analyzers in its official inspection program to include testing

of corn for oil, protein, and starch content as official criteria, and

incorporating by reference the Corn Refiners Association Method A-20,

Starch method, into the regulations. GIPSA is offering this service to

meet a market demand for reliable official testing procedures created

by anticipated increases in high-oil corn production.

DATES: Effective May 19, 1999.

The incorporation by reference of Analysis for Starch in Corn,

Method A-20, Second Revision, April 15, 1986, Standard Analytical

Methods of the Member Companies of the Corn Refiners Association, Inc.,

listed in this final rule, is approved by the Director of the Federal

Register as of July 1, 1998.

FOR FURTHER INFORMATION CONTACT: Sharon Vassiliades, GIPSA, USDA, STOP

3649, Washington, D.C. 20250-3649; FAX to (202) 720-4628; or e-mail

[email protected]; or John Giler, GIPSA, USDA, STOP 3632,

Washington, D.C., 20250-3632; telephone (202) 720-0252; or E-mail

[email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This final rule has been determined to be not significant for

purposes of Executive Order 12866 and, therefore, has not been reviewed

by the Office of Management and Budget.

Executive Order 12988

This final rule has been reviewed under Executive Order 12988,

Civil Justice Reform. This action is not intended to have a retroactive

effect. The United States Grain Standards Act (USGSA), as amended,

provides in section 87g that no State or subdivision may require or

impose any requirements or restrictions concerning the inspection,

weighing, or description of grain under the USGSA. Otherwise, this

final rule will not preempt any State or local laws, regulations, or

policies, unless they present an irreconcilable conflict with this

final rule. There are no administrative procedures which must be

exhausted prior to any judicial challenge to the provisions of this

final rule.

Effect on Small Entities

The Administrator of GIPSA has determined that this final rule will

not have a significant economic impact on a substantial number of small

entities as defined in the Regulatory Flexibility Act (5 U.S.C. 601 et

seq.).

Currently, NIRS analyzers are being used to determine protein in

wheat and protein and oil in soybeans in both domestic and export

markets. This final rule expands the use of currently approved NIRS

analyzers to test corn for oil, protein, and starch content;

establishes tolerances for corn oil, protein, and starch analyzers. The

fees for these services are identical to the fees already established

for wheat protein and soybean oil and protein testing services.

There are 53 official agencies (46 private entities, 7 States)

designated by GIPSA to perform official grain inspection services. In

addition, there are 8 delegated States. Most of the agencies could be

considered small entities under Small Business Administration criteria.

The extent to which these agencies will choose to provide this service

is difficult to quantify because GIPSA is offering this service as

official criteria, on a request basis, and locations where service is

requested infrequently may make arrangements with a neighboring agency

to provide the service (7 CFR 800.196(g)(1)). GIPSA believes that

offering this service would have a beneficial effect on those agencies

electing to provide the service.

For the 1998 crop year, high-oil corn production is estimated at

1.5 million acres. Currently, producers, grain handlers, exporters, and

feedlot operators rely primarily on private laboratories to determine

percent oil, protein, and starch in corn. Further, grain handlers and

exporters are using this information to determine value and premiums.

While exact numbers are not known, it can be assumed that many of the

value-enhanced corn producers, grain handlers, exporters, and feedlot

operators could be considered small entities under Small Business

criteria. The extent to which these entities will request the official

testing of corn for oil, protein, and starch, or the impact of offering

this service through the official system, is difficult to quantify.

However, GIPSA believes users of the inspection system will rely on the

official system to provide reliable testing procedures and accurate

results that the market can rely on to negotiate price, value, and

premium. GIPSA performed 2 million inspections for all grains in fiscal

year 1998.

To recover the cost of providing this service, GIPSA will charge

fees as follows: $1.50 per test when the test is performed at the

applicant's facility; $8.10 per test if the test is performed

elsewhere; and $15.85 for an appeal. These fees are the same as fees

charged for similar tests. The impact on applicants for services will

vary depending upon usage since these tests are provided on a request

basis.

Information Collection and Recordkeeping Requirements

In accordance with the Paperwork Reduction Act of 1995, the

recordkeeping and reporting burden imposed by Part 801 was previously

approved by OMB under control number 0580-0013 and will not be affected

by this final rule.

Background

In its 1997-98 report, Value-Enhanced Corn Quality Report, dated

April 1998, the U.S. Feed Grains Council defined value-enhanced corn as

corn with particular quality characteristics that add end-user value.

Value-enhanced

[[Page 19020]]

corn, also referred to as speciality corn, includes waxy corn, high-

lysine and other essential amino acid corn, hard endosperm corn,

popcorn, sweet corn, white corn, and high-oil corn. Additionally, work

is under way to develop nutritionally dense hybrid corn, which usually

includes some combination of higher-oil, higher protein, and/or altered

amino or fatty acid profiles.

The report estimated that value-enhanced corn is produced on 3.3 to

3.7 million acres (representing 4.5 to 5.1 percent of the U.S.

harvested corn acreage). It projected the U.S. acreage of value-

enhanced corn to remain essentially unchanged, with the exception of

high-oil corn, which is considered the fastest growing value-enhanced

corn produced in the marketplace. Approximately 1.5 million acres of

high-oil corn is projected for the 1998 crop year (up from virtually

none in 1993), and the acreage is expected to more than double in 1999.

The report suggested that high-oil corn will continue to be a

significant part of the value-enhanced corn produced and traded in the

marketplace and the market potential for both high-oil and

nutritionally dense corn is very high, representing the most

significant growth potential for the value-enhanced corn market.

High-oil corn is used by livestock feeders to replace animal fat

previously added to livestock rations and to help the animals gain

weight more quickly. U.S. No. 2 corn typically averages less than 4.5

percent oil content, while high-oil corn can contain up to 8.0 percent.

At this time, depending on the oil content, high-oil corn premiums

range from 5 to 24 cents per bushel. High-oil corn is almost

exclusively grown through contracts with livestock feeders or companies

that will export the grain.

For several years, corn processors and producers have expressed an

interest in having corn officially analyzed for oil, protein, and

starch content. GIPSA received a calibration database from Optimum

Quality Grains, Inc. Optimum Quality Grains, Inc. (a joint venture

between DuPont and Pioneer Hi-Bred), is a source of high-oil corn

germplasm. The calibration database consists of several hundred samples

which represent germplasm from a broad range of sources.

GIPSA used the database to derive calibrations in cooperation with

Optimum Quality Grains, Inc. GIPSA then tested the calibrations'

performance using an additional set of 92 corn samples not used in the

calibration database. The 92 corn samples represent oil, protein, and

starch ranges of 4.0 to 8.5 percent, 8.0 to 12.0 percent, and 64 to 72

percent (dry basis), respectively. Data collected on the 92 corn

samples were statistically analyzed.

The standard deviation of differences (SDD) between NIRS oil values

and official solvent oil extraction reference results was 0.44 percent.

A comparison of near-infrared transmittance (NIRT) analyzer protein

values and official Combustion Nitrogen Analyzer reference results

yielded an SDD of 0.40 percent. The SDD between NIRS analyzer starch

predictions and reference values obtained using the Corn Refiners

Association Method A-20 was 2.20 percent. GIPSA has determined that

this level of accuracy is commensurate with prospective official

customer needs.

To further assure the performance of the NIRT analyzer for corn

measurements, GIPSA established the maintenance tolerances for corn oil

content at 0.20 percent mean deviation from the national

standard NIRT analyzers, which are referenced and calibrated to the

GIPSA solvent oil extraction method; for protein content at

0.30 percent mean deviation from the national standard NIRT

analyzers, which are referenced and calibrated to the Combustion

method, AOAC International Method 992.23; and for starch content at

0.35 percent mean deviation from the national standard NIRT

analyzers, which are referenced and calibrated to the Starch method,

Corn Refiners Association Method A-20.

On June 30, 1998, GIPSA published in the Federal Register (63 FR

35502) an interim rule announcing the immediate availability of

official oil, protein, and starch testing service for corn as official

criteria under the authority of the USGSA. The interim rule also

announced the establishment of performance tolerances between NIRS and

reference methods for oil, protein, and starch determinations and

established fees for the service. Additionally, a 30-day comment period

that ended July 30, 1998, was provided. The fees for the service

established by the interim rule were revised and finalized in a rule

published in the Federal Register December 23, 1998 ( 63 FR 70990), and

became effective February 1, 1999.

Comment Summary

During the 30-day comment period, GIPSA received comments from Dow

AgroSciences, Iowa State University (ISU), Zeltex Inc., and MBS Inc. A

summary of the four comments received is as follows:

(1) Dow AgroSciences, a business unit of the Dow Chemical Co., is a

supplier and developer of biotechnology seeds (e.g., nutritionally

enhanced corn and high oleic/low linolenic canola). Dow AgroSciences

has cooperated with ISU in the development of NIRT corn calibrations.

Their concern is that the GIPSA calibration was developed from Optimum

Quality Grains, Inc., data that did not include their corn.

Consequently, they believe the GIPSA calibration will not accurately

measure their commodity, which could put them at a competitive

disadvantage.

(2) Iowa State University is a public land-grant institution that

provides technical support for NIRS calibration development and

operates a grain quality lab that monitors the quality of Iowa's corn

production. ISU raised questions regarding the acquisition of GIPSA's

calibration data, the representativeness of the calibration data set,

and the performance tolerances for the instrumentation.

(3) Zeltex Inc. is an NIRS company that is developing a whole grain

analyzer which they plan to submit for approval as a moisture meter

under the National Conference of Weights and Measures' National Type

Evaluation Program (NTEP). Zeltex Inc. has been cooperating with ISU on

the development of corn and soybean calibrations for their instrument.

They questioned the calibration development and the approval of a

single instrument for analysis. Zeltex Inc. is concerned that the GIPSA

calibration sample data set was insufficient in size and was not

representative of other corn varieties traded in the marketplace.

Additionally, they are concerned that the GIPSA-approved Foss

instrument will prevent Zeltex Inc. from marketing their NIRS

instrument in the United States.

(4) MBS Inc. is a foundation seed company that develops and markets

new soybean varieties and value-enhanced corn hybrids, with

characteristics targeted for specific end-users and provides NIRS

calibrations and support to the grain and seed industry. They use the

calibrations developed at ISU. MBS Inc.'s comments questioned the

representativeness and source of the calibration data, and questioned

the performance of the calibration. They also questioned how future

calibrations would be developed.

Commenters suggested that GIPSA: (1) withdraw the current proposal;

(2) promote dialogue among all interested parties regarding calibration

development; and (3) develop an open procurement process to obtain

calibration data.

[[Page 19021]]

Comment Review

GIPSA believes that the commenters' suggestion to withdraw the

current proposal is unwarranted. For several years, high-oil corn

processors and producers have expressed an interest in having corn

officially analyzed for oil, protein, and starch content. Future crop

production estimates identified high-oil corn as the fastest growing

value-enhanced corn in the marketplace. For the 1998 crop year, high-

oil corn production is estimated at 1.5 million acres and is expected

to more than double in 1999. Also, the possible introduction of

nutritionally dense hybrid corn makes it necessary to provide the grain

industry with a reliable official testing procedure it can use to

negotiate price, value, and premium. Additionally, GIPSA is offering

this service upon request as official criteria which has no effect on

the grade designation. Consequently, GIPSA believes that offering this

service will enhance the marketability of speciality corn domestically

and for export.

Commenters misinterpreted the information in the interim rule to

suggest the calibrations were developed based on only 92 samples. In

fact, the calibration was based on several hundred samples and

validated with an additional 92 corn samples. Based on its assessment

of samples in the database, GIPSA determined that the calibration

database obtained from Optimum Quality Grains, Inc., was representative

of current samples in the marketing system. When GIPSA explored the

possibility of providing official testing of corn for oil, protein, and

starch content, other NIRS calibration sources (including ISU and MBS

Inc.) were contacted to enlist their cooperation. After reviewing the

available sources of NIRS calibration data, GIPSA decided to use the

Optimum Quality Grains, Inc., database for the following reasons: (1)

Optimum Quality Grains, Inc., is the dominant source of high-oil corn

in the current market; (2) their analytical procedures were reviewed

and were compatible with GIPSA's procedures for calibration

development; (3) their calibration data contained several hundred

samples; and (4) they provided their calibration data to GIPSA at no

cost and without restrictions on its use.

One commenter suggested that, because GIPSA proposes to charge fees

for corn analysis, its choice of the Optimum Quality Grains, Inc.

database for purposes of calibration of near-infrared transmittal

(NIRT) analyzers represents procurement of an outside service by GIPSA.

The commenter suggests that procurement bidding protocol for government

procurements required GIPSA to evaluate other databases or request

derived dry basis calibrations from other databases in an organized

manner following government procurement procedures.

The Office of Federal Procurement Policy Act provides the following

definition of ``procurement,'' in relevant part: ``all stages of the

process of acquiring property or services.'' 41 USCA 403(2). The

Federal Acquisition Regulation (FAR), 48 CFR parts 1-52, which applies

to all ``acquisitions'' (except where expressly excluded) (48 CFR

1.104) defines an ``acquisition,'' in relevant part, as ``the acquiring

by contract with appropriated funds of supplies or services * * * by

and for the use of the Federal Government through purchase or lease, *

* * '' (48 CFR 2.101).

GIPSA's choice of the Optimum Quality Grains, Inc., sample

information as a data standard constitutes neither a ``procurement''

nor an ``acquisition'' under these definitions, and the applicability

of government procurement laws is not predicated on the fact that the

government may charge a fee for a service it may perform. Instead,

GIPSA's choice is part of the policy-making process in the development

of a rule which includes fees for providing official testing services.

The policy basis for the fee charged is based on an already established

fee for a specific method of testing. Therefore, GIPSA chose to use the

Optimum Quality Grains, Inc., database for calibration purposes because

their analytical methods were compatible with the methods employed by

GIPSA. GIPSA's choice of an outside data source for incorporation into

the regulatory action, which is a practice permitted for rulemakings by

the Director of the Federal Register in accordance with 5 U.S.C. 552(a)

and 1 CFR part 1, is part of the rulemaking process outlined under 5

U.S.C. 553 of the Administrative Procedure Act (APA). The adoption of

an outside reference point, standard, scientific study, or other data

as part of the factual basis of a rulemaking cannot be converted from a

question of the sufficiency of the rulemaking under the APA into a

procurement or acquisition of goods and services subject to Federal

statutes applicable to government procurement.

Commenters also indicated that GIPSA's choice of the Optimum

Quality Grains, Inc., database creates a monopoly for the company that

created the method from which GIPSA derived the calibration. GIPSA

disagrees with this comment.

The initial GIPSA calibration is intended to represent the majority

of high oil corn that will be traded in the 1998 crop year. GIPSA's

plan for future calibration development will expand the population of

the database to other sources of value-enhanced corn. GIPSA intends to

provide opportunities for interested parties to supply samples of

material from other germplasm sources for inclusion in its calibration

updates. Consequently, as additional hybrids reach the feed and food

marketing channels, GIPSA will solicit new samples for inclusion in the

calibration data set. GIPSA will then maintain and control the NIRS

corn oil, protein, and starch calibrations in a similar manner as it

maintains and controls other official calibrations (e.g., wheat protein

and soybean oil and protein).

After receiving the already established database, GIPSA derived and

tested the calibrations using its calibration development software and

methodology. Commenters suggested that other calibrations are more

accurate than the GIPSA calibrations. This conclusion appears to have

been based on results from different sample sets. Also, some

assumptions and conclusions reached by ISU regarding the GIPSA

calibration performance were based on limited information. GIPSA's

assessments of the relative accuracies of the available calibrations

support the choice of the calibration based on the Optimum Quality

Grains, Inc., database. To further assure the performance of the NIRT

analyzer for corn measurements, GIPSA is establishing the maintenance

tolerances of 0.20, 0.3, and 0.35

percent mean deviation for oil, protein, and starch, respectively, from

the national standard NIRS instruments, which are referenced and

calibrated to standardized analytical methods.

GIPSA decided to use current instrument technology because it was

already approved and available within the official inspection system. A

single instrument model with a single calibration will provide

significantly better consistency across inspection laboratories than

multiple instrument types or multiple calibrations. This fact has been

demonstrated by GIPSA in the past and was actually supported by one of

the commenters. Further, GIPSA decided to utilize currently approved

equipment because it provided an opportunity to implement a new service

with minimal additional cost to the official inspection program. Cross-

utilizing instruments already available in the official laboratories is

reasonable and cost effective. Allowing multiple

[[Page 19022]]

instrument models and/or calibrations for corn measurements would

greatly increase the cost of the GIPSA standardization program, would

increase the cost of the overall inspection service, and would reduce

the reliability of official inspection results. In addition, GIPSA does

not regulate or control the use of analytical instruments outside of

the official inspection system. Consequently, unofficial inspection

service providers may use other instruments and/or calibrations.

This final rule also incorporates by reference the Corn Refiners

Association Method A-20, Starch method, into the regulations. GIPSA

will use this method as the chemical reference method for determining

the starch content in corn.

GIPSA is required to collect fees for providing official testing

service to cover, as nearly as practicable, GIPSA's costs for

performing the service, including related administrative and

supervisory costs. Testing procedures and time necessary to determine

oil, protein, and starch in corn using the approved NIRT analyzers are

the same as those required for NIRT wheat protein or NIRT soybean oil

and protein determinations. Therefore, GIPSA has decided to collect

fees identical to the fees established for NIRT wheat protein or NIRT

soybean oil and protein testing services. These fees will be $1.50 per

test when the service is performed at an applicant's facility in an

onsite Federal Grain Inspection Service (FGIS) laboratory; $8.10 per

test when an original inspection service is performed at a location

other than an applicant's facility in an FGIS laboratory; and $15.85

per test when an appeal inspection service is performed at a location

other than an applicant's facility in an FGIS laboratory.

GIPSA has carefully considered the comments received regarding this

action and has determined that it is in the best interest of American

agriculture to offer this service. This decision is based on the fact

that (1) the calibration data set represents a significant part of the

1998 corn market, (2) GIPSA plans to expand the calibration data set to

incorporate new germplasm sources as they are released to the

commercial market, (3) future calibration enhancements will remain

under the direct control of GIPSA, and (4) the performance of the NIRT

instruments will continue to satisfy market needs.

Final Action

Value-enhanced corn is produced on 3.3 to 3.7 million acres. It is

projected that the U.S. acreage of value-enhanced corn is to remain

essentially unchanged, with the exception of high-oil corn.

Approximately 1.5 million acres of high-oil corn is projected for the

1998 crop year and is expected to more than double in 1999. High-oil

corn will continue to be a significant part of the value-enhanced corn

produced and traded in the marketplace (the market potential for high-

oil corn is very high, representing the most significant growth

potential for the value-enhanced corn market). Also, the possible

introduction of nutritionally dense hybrid corn makes it necessary to

provide the grain industry with a reliable official testing procedure

it can use to negotiate price, value, and premium. Additionally, GIPSA

is offering this service upon request as an official criteria, which

will have no effect on the grade designation.

For several years, corn processors and producers have expressed an

interest in having corn officially analyzed for oil, protein, and

starch content. When GIPSA explored the possibility of providing

official testing of corn for oil, protein, and starch content, several

NIRS calibration sources (including ISU and MBS Inc.) were contacted to

enlist their cooperation. After reviewing the available sources of NIRS

calibration data, GIPSA decided to use the Optimum Quality Grains,

Inc., database for the following reasons: (1) Optimum Quality Grains,

Inc., is a significant source of high-oil corn in the current market;

(2) their analytical procedures were reviewed and were compatible with

GIPSA's procedures for calibration development; (3) their calibration

data contained several hundred samples; and (4) they provided their

calibration data to GIPSA at no cost and without restrictions on its

use.

The initial GIPSA calibration is intended to represent the majority

of high oil corn that will be traded in 1998. GIPSA's plan for future

calibration development will expand the population of the database to

other sources of value-enhanced corn. GIPSA intends to provide

opportunities for interested parties to supply samples of material from

other germplasm sources for inclusion in its calibration updates.

Consequently, as additional hybrids reach the feed and food marketing

channels, GIPSA will solicit new samples for inclusion in the

calibration data set.

GIPSA has carefully considered the comments received regarding this

action and has determined that it is in the best interest of the corn

industry to offer this service. This decision is based on the fact that

(1) the calibration data set represents a significant part of the 1998

corn market, (2) GIPSA plans to expand the calibration data set to

incorporate new germplasm sources as they are released to the

commercial market, (3) future calibration enhancements will remain

under the direct control of GIPSA, and (4) the performance of the NIRT

instruments will continue to satisfy market needs. GIPSA believes that

offering this service will enhance both the export and domestic

marketability of speciality corn.

Therefore, GIPSA will offer corn oil, protein, and starch testing

services as official criteria under the authority of the USGSA. Upon a

request for service, official inspection personnel will determine corn

oil, protein, and starch content. Percent corn oil, protein, and starch

will be reported to the nearest tenth percent on a dry matter basis

(zero moisture basis) unless another moisture basis is requested.

Based on this and other available information, GIPSA has determined

that the interim rule amending Part 801 as published at 63 FR 35502

will be adopted as the final rule.

List of Subjects in 7 CFR Part 801

Grains, Incorporation by reference.

PART 801--OFFICIAL PERFORMANCE REQUIREMENTS FOR GRAIN INSPECTION

EQUIPMENT

Accordingly, the interim rule amending 7 CFR Part 801 which was

published at 63 FR 35502 on June 30, 1998, is adopted as a final rule

without change.

James R. Baker,

Administrator, Grain Inspection, Packers and Stockyards Administration.

[FR Doc. 99-9518 Filed 4-16-99; 8:45 am]

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